Jet Airways to buy Air Sahara for Rs 1,850 cr

Jet Airways has offered to buy Air Sahara for Rs 1,850 crore. The amount is less than Rs 350 crore which Jet had offered to pay in January 2006. Jet had then valued Air Sahara at Rs 2200 crore. Sources tell TV18 Network that Jet is offering less amount to account for creditors' dues. Jet has already paid Rs 680 crore to Air Sahara – Rs 180 crore for reviving the airline and Rs 500 crore as bank guarantee. Speaking about the deal Jet Airways Chairman Naresh Goyal said, “As far as I am concerned I can’t comment on the matter. I can’t give any comments at this time. Everything will be known through the arbitrators hopefully by tomorrow.”

Aviation expert are saying there will be a very tricky situation for Jet Airways. Jet Airways already has a wide range of network in India and it is looking for expansion in a major way as far as the global operations are concerned. Experts say that it would have been better for both Jet Airways and Sahara Airways if they had merged before one year. But at present there is lot of competition so it will be really tough going. Jet Airways will be spending quit a lot of money in getting the airline, paying off the creditors and that could impact Jet operations. Jet announced in March 2006 that its plans to buy Sahara were on track. After the deal fell through, following Jet's failure to get regulatory clearances by the deadline of June 21 2006, both parties moved court and the matter was directed for arbitration.

A week after the proposed merger between Jet and Sahara fell through - a merger that was touted as the biggest aviation deal in India - the legal battle lines were drawn and later the deal capped a series of developments. Following the scrap of the acquisition deal, both the parties moved to court to stop the other party from operating the escrow account opened for the deal. Sahara filed a caveat in the Supreme Court (SC). A caveat is a formal notice filed by a party with the court or an officer, requesting the postponement of a proceeding until the filer is heard. Sahara filed the caveat after the media reported that Jet Airways had stated that the decision not to salvage the $500 million merger deal was purely on 'commercial considerations' and that it was moving the Supreme Court for transfer of litigation in different courts - Lucknow and Bombay High Court.

Jet also filed a petition under Section 9 in the Bombay High Court. Till the time of the verdict, Sahara wanted the escrow account of Rs 1,500 crore with ICICI Bank frozen. Afterwards, Sahara threatened to sue Jet Airways, seeking damages to the tune of Rs 2,000 crore from the airline for illegally backing out from the deal. Sahara has also threatened to sue Jet Airways, seeking damages to the tune of Rs 2,000 crore from the airline for illegally backing out from the deal. However, under pressure to come clean, the Government said that the Jet-Sahara deal did not fail due to procedural delays. Civil Aviation Minister Praful Patul refuted Jet Airways' allegation that policy delays on the Government's part led to the failure of the Jet-Sahara deal. Patel said the Government policy has been in place since May 2006 and that the Centre does not need to put together new policy just for one specific deal.

Courtesy: CNN-IBN

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